“… it is also open to me, by analogy with the principles governing the drawing of inferences from the absence of a witness, to draw appropriate inferences from the want of disclosure, if I am satisfied that relevant documents have not been provided. I propose therefore to draw on the principles set out above in this regard, and I have indicated above where there is a shortcoming. I consider below what inferences are appropriate.”

THE CASE

The judge was considering the witness evidence in relation to a letter of credit supplied by the defendant. The claimant decided, at the last moment, not to call its only witness.

I did not however hear from Mr Black, of the Claimant. Although he was due to give evidence, at the last minute the decision was taken not to call him. The Defendant asked me to draw various inferences against the Claimant as a result of this, those inferences being as follows:

(1) The Claimant did not wish to be cross examined about the fact that the Claimant knew that the issuers of the letters of credit were Suisse Bank PLC and SBOL; I should draw the inference that the Claimant had this knowledge.

(2) The Claimant did not wish to be cross examined about the fact that it knew that the Defendant had no liability on the letters of credit; I should draw the inference that it did know this.

(3) The Claimant did not wish to be cross examined about its knowledge of the various banks involved; I should draw the inference that the Claimant had such knowledge.

(4) The Claimant did not wish to be cross examined about the extent to which Mr Black checked the letters of credit. I should draw the inference that he did check them.

(5) The Claimant did not wish to be cross examined about the “murkiness” of a number of aspects of the transaction, including:

(a) Why LC2 was opened and LC1 closed?

(b) Why was there a time gap between LC1 and LC2?

(c) What was the nature of the fraud referred to in the documents passing between Mr Zulauf and Mr Black?

(d) Why the second letter of credit gave the impression that there had been a further shipment when there had not been?

(e) Why was a second certificate of origin issued?

(6) The Claimant did not wish to be cross examined about the “negotiation” of the documents, which would show its knowledge or belief of the capacity in which the “negotiating” bank was acting.

(7) The Claimant did not wish to be cross-examined about the extension of the maturity date, how that came about and what that indicated about the knowledge or belief of the Claimant as to who it was to look to.

In this regard, I was referred to the decision of the Court of Appeal in Wisniewski v Manchester Health Authority[1998] PIQR P324. There the Court laid out general principles in relation to the drawing of adverse inferences in civil cases, as follows:

“(1)In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.

(2) If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.

(3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.

(4) If the reason for the witness’s absence or silence satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.”

The Claimant’s explanation for the absence of Mr Black was that his evidence was not relevant to the issues. I do not accept this. Plainly the view was taken that his evidence was relevant at the time his witness evidence was prepared and tendered, and, as the major representative of the Claimant, this is what one would have expected. In addition, the decision not to call him meant that Mr Ayres QC did not have the opportunity to cross examine him. His evidence would have been relevant to the question of estoppel by convention, and would also have been relevant to such of the issues of construction which depend on what the knowledge of the parties was as to the part that other parties were in fact playing in the transaction.

Accordingly, I think that it is open to me to draw adverse inferences against the Claimant, in accordance with the principles quoted above. The precise extent of those inferences I consider below.

Disclosure.

At this point, I should say a word about disclosure in this case. It was clear, and Mr Brown very fairly accepted, that there were serious shortcomings in the Claimant’s disclosure in this case. Hence, until shortly before trial, the Claimant had provided no correspondence between it and its buyer relating to the underlying transaction or (more importantly) the letter of credit to be provided; it had provided no documentation showing communications between it and the banks in China through and to whom messages were relayed; and it had provided no, or no significant, correspondence between it and Mr Zulauf, of Suisse Bank and SBOL, with whom the letter of credit arrangements were clearly discussed.

Those documents which were provided raised more questions than they answered. I have referred above, by way of example, to the peculiar exchange by email in mid February 2014 relating to the circumstances in which LC2 was issued, which included a suggestion by Mr Zulauf, the individual who was behind Suisse Bank and SBOL that the Claimant was involved in some unspecified fraud. Moreover, I have also noted above the fact that certain documentation was provided shortly before trial which suggested that there might have been an agreement between the Claimant and its buyer to cancel LC2 on account of certain shortcomings in the goods and the agreement of an alternative method of payment by the buyer.

In my judgment, it is also open to me, by analogy with the principles governing the drawing of inferences from the absence of a witness, to draw appropriate inferences from the want of disclosure, if I am satisfied that relevant documents have not been provided. I propose therefore to draw on the principles set out above in this regard, and I have indicated above where there is a shortcoming. I consider below what inferences are appropriate.